Constraints to logistics through the Port of Richards Bay has thwarted any intentions that one of South Africa’s biggest coal producers, Exxaro, had of growing its exports in the first half of 2023.
Instead, coal outflows through the beleaguered port is down 6%.
Apart from problems with Transnet Freight Rail (TFR) and power issues because of load shedding, the company’s financial performance was also hit by inflation and lower coal prices.
Mining Mix reports that Exxaro was unable to ramp up production, possibly resulting in less foreign exchange for the fiscus due to lower output.
In addition, decreased job creation seems a certainty.
The coal sector and the Minerals Council SA have been trying to help with a TFR turnaround, but unsuccessfully.
In a pre-close update on the group’s interim performance to 30 June, Exxaro’s finance director Riaan Koppeschaar said total coal production for the six months (including buy-ins and metallurgical coal) is expected to be down 3% to 20.7 million tons (Mt).
Reduced demand by Eskom and shipment constraints at Richards Bay has also driven down sales by 7% to 19.5 Mt, compared to the same period last year.
Exports will drop by 6% to 2.5Mt because of the poor performance of the rail line to the port’s coal terminal.
Lower coal prices also make it less economical for producers to truck coal to the port.
Although domestic demand is stable, coal stocks are rising because of export constraints.